From the Editor: Focus on What Matters

Stop issuing quarterly earnings reports. That was the recommendation of the US Chamber of Commerce's report released in early March. It is one of the best business proposals I've heard in a while. And the idea, applied more broadly, would be good for biopharmaceuticals.

The idea is not new, but what is compelling this time is that the message came from the chamber's bipartisan Commission for the Regulation of US Markets in the 21st Century, an influential group of industry insiders and policy pundits. Publicly listed companies are not legally required to issue quarterly earnings reports; but they are pressured to do so by the investment community, and everyone is afraid not to. However, the focus on quarterly earnings encourages companies to make shortsighted decisions to ensure that current numbers look good, even when that means sacrificing investment in long-term gains. Sometimes, it even encourages people to engage in illegal actions, such as recording sales before they happen.

Financial pressure to show short-term results also affects the pharmaceutical industry, from Big Pharma to small biotech. In a recent presentation, Roger M. Perlmutter, MD, PhD, executive vice president of research and development at Amgen, encouraged the industry to think not about short-term profits, but about what matters in the long term. "Focus on grievous illness," he said. "Focus on treating sick people and making them better, not on making modest improvements in existing treatments that don't matter." The speech was delivered at the Society for Biological Engineering's First Annual Conference on Accelerating Biopharmaceutical Development, held in San Diego, March 19–22.

Although Perlmutter focused on long-term concerns, he expressed a strong sense of urgency for industry—particularly Big Biotech and Big Pharma—to rethink its approach to drug innovation. Citing the case of Amgen's 1995 discovery of osteoprogerin, which may lead to an approved drug in 2010 to treat patients with bone loss, he said the process was too slow and too indirect. "Can we afford to wait decades?" he asked rhetorically. "We are all patients someday. What are we waiting for?"

Of course, improving drug discovery is a complex challenge. As Perlmutter pointed out, one of the biggest problems is the lack of correlation between preclinical and clinical data; we need better clinical models and better tools for elucidating a drug's mechanism of action. But a key first step is focusing on the right thing: meeting the long-term needs of patients.

Perlmutter's message, of course, is aimed at the big industry players, who have a level of financial self-determination that the small biotechs don't share. Unless these large organizations regain some of their discovery productivity, the short-term results may not be sustainable.